January 25, 2012 / 10:53 AM / 8 years ago

METALS-Copper rises on U.S. data, falling inventories

* Euro slips against dollar, euro zone debt fears persist
    * U.S. manufacturers top forecasts, pending home sales fall
    * Copper stocks fall to lowest since Sept 2009
    * Coming up: FOMC rate decision 1730 GMT

    By Harpreet Bhal	
    LONDON, Jan 25 (Reuters) - Copper rose on Wednesday, underpinned by a
flurry of technical buying, signs of a modest U.S. economic recovery and data
showing falling inventory levels of the metal, but a firm dollar and concerns
over the euro zone economy restrained more gains.	
    Three-month copper on the London Metal Exchange, untraded at the
close, was last bid at $8,384 per tonne from Tuesday's close of $8,360. It
earlier hit its highest since Sept. 19 at $8,455.25.	
    Three major U.S. manufacturers reported better-than-expected profit and
stuck to their forecasts of earnings growth this year, with solid emerging
market demand and a modest U.S. recovery offsetting weakness in Europe.
 	
    And while U.S. pending home sales fell, the reports did not change
perceptions that a nascent recovery is under way in the country's housing
market. 	
    "Most of the moves over the last couple of weeks have been purely
technical," said Citi analyst David Wilson. "Most hedge funds are sitting out
not wanting to do anything."	
    The euro fell from session highs against the dollar as worries the European
Central Bank would need to take losses on its Greek bond holdings outweighed a
strong German business sentiment survey. 	
    Gains in the dollar usually pressures dollar-denominated commodities by
making them more expensive for consumers using other currencies. 	
    "Frustration is growing because an agreement is yet to be reached about
Greece's debt talks," said Andrey Kryuchenkov, analyst at VTB Capital.	
   "People are simply too concerned with the euro zone debt crisis so I don't
expect sustained gains for metals from here."	
    Trading volumes remained low, with top consumer China away. The Shanghai
Futures Exchange is closed this week for the Lunar New Year holiday. Chinese
financial markets will reopen on Monday, Jan. 30. 	
    Market focus now turns to the Federal Reserve, with the U.S. central bank
expected to begin a new practice of announcing policymakers' interest rate
projections when a two-day meeting ends later on Wednesday.	
     	
    FALLING STOCKS 	
    Large stock withdrawals in LME-monitored warehouses helped support copper,
with the latest data showing inventories monitored by the LME 
dropped by 2,500 tonnes to 339,750 tonnes, its lowest level since September
2009. 	
    "The pace of this withdrawal is quite strong and that indicates there is
steady spot demand," Kryuchenkov said.	
    On the technical front, copper could break on the upside, a trader in London
said, citing a widespread theory that Chinese copper traders were short, and
with the metal trading near a 200-day moving average, which if triggered could
send a buy signal to funds. 	
    "Many copper traders are convinced the Chinese are short and will be big
buyers after the holidays, an added reason why copper is facing 8,500 and a big
breakout," he said. 	
    A break above the 200-day moving average for the first time in around five
months could spur fresh technical buys, traders said, but with China away, any
advance would likely prove short-lived.	
    "There still seems to be this expectation that China will come crashing back
into the copper market and start buying," Wilson added. "I don't think that is
going to be the case." 	
    Aluminium closed at $2,252 a tonne from a close of $2,239
on Tuesday, and zinc at $2,175 from $2,125.	
    Tin closed at $22,450 from $22,190, lead at $2,282 from
$2,250 a tonne, and nickel at $20,940 from $20,600 a tonne.	
   	
 Metal Prices at 1718 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                              move
  COMEX Cu       379.90       -0.55     -0.14     444.70    -14.57
  LME Alum      2255.00       16.00     +0.71    2470.00     -8.70
  LME Cu        8374.25       14.25     +0.17    9600.00    -12.77
  LME Lead      2273.00       23.00     +1.02    2550.00    -10.86
  LME Nickel   20880.00      280.00     +1.36   24750.00    -15.64
  LME Tin      22430.00      240.00     +1.08   26900.00    -16.62
  LME Zinc      2159.50       34.50     +1.62    2454.00    -12.00
  SHFE Alu     16395.00       30.00     +0.18   16840.00     -2.64
  SHFE Cu*     60720.00      160.00     +0.26   71850.00    -15.49
  SHFE Zin     15855.00      195.00     +1.25   19475.00    -18.59
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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